Dollar Thrifty reports third-quarter drop in earnings
BY D.R. STEWART World Staff Writer
Friday, November 02, 2012
11/02/12 at 3:45 AM
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Dollar Thrifty Automotive Group.
Dollar Thrifty Automotive Group Inc., the Tulsa-based rental car company that Hertz Global Holdings Inc. seeks to acquire for $2.3 billion, reported on Thursday a third-quarter net income of $55.5 million, or $1.91 per share.
Dollar Thrifty's earnings were a 16.7 percent decrease from its 2011 third-quarter earnings of $66.6 million, or $2.13 per share.
Revenue was $460.59 million, a 1.9 percent increase from 2011 third-quarter revenue of $451.7 million.
Dollar Thrifty executives said both its third-quarter pre-tax income, as measured by general accepted accounting principles, and its corporate adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were negatively affected by merger-related expenses of $5.7 million, while no merger-related expenses were incurred in last year's third quarter.
In addition, company officials said third-quarter gains on sales of risk vehicles - vehicles for which the manufacturer provides no provisions for repurchase - totaled $5.2 million, down from $17.4 million in 2011's third quarter.
Dollar Thrifty Chairman, President and CEO Scott Thompson said the company posted another solid quarter to its strong year-to-date performance.
"Excluding merger-related expenses, the company has now generated $269 million in corporate adjusted EBITDA for the nine months ended Sept. 30," he said. "In spite of a lackluster economic environment and continued softness in pricing in the industry, the combination of increased rental demand, ongoing focus on operational efficiencies and disciplined fleet management allowed us to continue to deliver solid results."
The Tulsa rental car operator's expenses rose 7.6 percent in the third quarter, driven by a 40.8 percent increase, to $89.1 million, of vehicle depreciation and lease charges, and a 13.8 percent increase, to $54.45 million, of selling, general and administrative expenses.
Fleet cost per vehicle was $246 per month in the third quarter, compared with $186 per month in last year's third quarter. The increase in fleet cost per vehicle was attributable to the decrease in gains on sales of risk vehicles combined with higher average base depreciation rates, compared with 2011's third quarter, company executives said.
As of Sept. 30, Dollar Thrifty had $457 million in cash and short-term investments, and an additional $250 million in restricted cash and investments primarily available for the purchase of vehicles and/or repayment of vehicle financing obligations.
The company's liquidity and capital resources at the close of the third quarter compares with its June 30 position of $285 million in cash and short-term investments and $199 million in restricted cash and investments primarily available for the purchase of vehicles and/or repayment of vehicle financing obligations.
At the close of the third quarter, Dollar Thrifty's tangible net worth was $725 million, up from $663 million on June 30, and it had no corporate debt outstanding, unchanged from the end of the second quarter.
In a departure from the company's tradition of holding a quarterly earnings conference call with analysts and the media, Dollar Thrifty executives did not elaborate on the company's earnings statement beyond referring to Hertz and its ongoing merger effort before the Federal Trade Commission.
Hertz executives said they expected the FTC to complete its antitrust review of the Dollar Thrifty deal by mid-October, but some industry analysts now believe FTC approval is not assured.
In a statement, Thompson said he would be surprised if the FTC didn't approve the proposed merger.
"The FTC would be standing in the way of the industry becoming more cost efficient," Thompson said. "Additionally, the transaction would make Hertz a stronger competitor against the dominant company in the industry, Enterprise Holdings Inc., which owns the Enterprise, Alamo and National brands and had $13.5 billion in revenue in fiscal 2012.
"The process has been very long and very difficult on our people. I am extremely proud of how the employees have performed; they have been tremendous. They have really demonstrated that they are the primary asset of the company."
On Wednesday, Hertz reported third-quarter earnings of $242.9 million, or 55 cents per share, a 14.3 percent increase compared with its 2011 third-quarter earnings of $212.5 million, or 47 cents per share.
In a conference call with analysts Thursday, Hertz Chairman and CEO Mark Frissora said the company has extended to Nov. 5 the expiration date for its $87.50-per-share tender offer for Dollar Thrifty's outstanding shares.
"Rest assured, we are working very hard on this offer, but we don't know when the FTC will act," Frissora said.
Hertz's CEO said the company wouldn't comment further on the Dollar Thrifty deal or the FTC review.
Dollar Thrifty shares closed Thursday at $74.14, down $2.86 or 3.7 percent. Volume was 4.87 million shares, more than three times Dollar Thrifty's normal daily trading of 1.34 million shares.
Hertz rose 38 cents or 2.86 percent, closing at $13.65. Volume was 12.19 million shares, more than twice its normal daily volume of 5.7 million shares.
Dollar Thrifty 3Q earnings
Net income: $55.5 million ($66.6 million in 2011)
Earnings per share: $1.91 ($2.13)
Revenue: $460.59 million ($451.7 million)
Source: Dollar Thrifty Automotive Group Inc.
Original Print Headline: Dollar Thrifty reports drop in earnings
D.R. Stewart 918-581-8451